B-133001: Published: Jul 24, 1964. Publicly Released: Jul 24, 1964.

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This report concerns primarily the administration of selected special counterinsurgency activities of the economic assistance program for Viet Nam and certain problems relating to policies and practices of the Government of the Republic of Viet Nam during the period 1958 to 1962, that directly affected or impeded the administration of the program and the attainment of its objectives. Other phases of the program for Viet Nam included in our review for that period will be presented in separate reports now being prepared. The administration of the economic and technical assistance program for Viet Nam has been complicated, and the attainment of its objectives has been impeded by certain policies and practices of the Government of Viet Nam. At the time of our review, the Government of Viet Nam had not taken means necessary to assure that it would obtain a reasonable share of the country's financial resources in order to better support its economic development and counterinsurgency activities, nor had it used its financial resources at hand to benefit these activities to the maximum particularly in such matters as the continuation of an unrealistic exchange rate and a seriously defective tax system and the imprudent use of its foreign exchange for luxury goods. The inability or unwillingness of the Government of Viet Nam to take substantive steps to remedy these defects in its economic and financial policies has had the effect of obstructing achievement of the objectives of the aid program. The Agency for International Development has informed us that its latitude in dealing decisively with these problems was limited by the overriding policy of the United States to support the Government of Viet Nam against Communist insurgency. The Agency has informed us also that it has sought to accomplish reforms within the recipient country which would overcome these problems. In view of the subsequent changes in the Government of Viet Nam as a result of the coups which overturned the existing governments in November 1963 and January 1964 and of the current reevaluations of the administration of the Viet Nam program which we understand are being undertaken by the Agency, we are making no recommendations.

Our review of certain measures embodied in a special counterinsurgency plan sponsored by United States authorities in January 1961 to assist the Republic of Viet Nam in overcoming intensified Viet Cong activities showed that they were subjected to extended unnecessary delays despite the fact that (1) the measures had been assigned the highest priority within the economic program and (2) the critical security conditions at the time, particularly in the rural areas, were considered to demand immediate and extraordinary action. For example, prolonged delays occurred in providing low-cost radio receivers as means for the villages to receive communications from the United States-financed radio network; in purchasing and installing electrical generating equipment needed for use in small cities, towns, and rural areas; and in drilling wells urgently needed to provide potable water in the rural areas. After adopting a high-priority counterinsurgency plan, the timely execution of which was considered essential, the Agency failed to assign program responsibilities, develop program priorities, or to monitor program implementation in an effective manner. We believe that these failures reflect serious weaknesses in the management machinery of the Mission and the Agency. The Agency informed us that it agreed that there were delays, some of them serious, in the execution of programs relating to counterinsurgency in the period under review. The Agency also stated that there were substantial achievements. We have been informed that subsequent measures were taken, including the provision of new and additional senior personnel in Washington and Saigon, the delegation of unprecedented procurement and contracting authority to the Agency's mission in Saigon, and the installation of an entirely new logistical system modeled along military lines. The effectiveness of these actions will depend on the manner in which they are carried out. However, we are concerned with whether local actions, such as the addition of new personnel or the delegation of program authority, go to the root of the problem. We believe that, before basic improvements can be assured, it will be necessary to have (I) a more responsive management system and (2) a better means for measuring progress toward planned objectives during their implementation. From our review, we believe that there has been a tendency to lose sight of these basic elements of sound management in these programs. Unless these basic elements are provided, we believe that there is a reasonable doubt that the Agency can expect any significant improvement in the responsiveness to purpose or in the manner in which its plans are carried out.